Urbanisation-key To Chinas Industrial Growth

Not so long ago, China was offering only a limited array of investments through ETFs

. Inspite of excellent growth in the China consumer & manufacturing industry, the profit was capped due to sectors like finance & technology losing their momentum in the recent years. However, now the Chinese specific Industry based ETFs have resolved that issue. Funds like Global X China industrial [CHII], which has a majority holding in Infrastructure & Railways sector, provide a much needed confidence to the investors, especially when the growth curve of China has been tamed owing to Global Economic Pressure.

China as a nation is expanding rapidly. The state announcement of 12th Five year plan indicates clearly that the government is serious about increasing the contribution of infrastructure sector towards its GDP. A heavy influx of affordable housing [nearly 36 million new dwellings] in Chinese cities will take place, catering to the rapid urbanisation of the country. The urbanization rate will touch 52.2% by 2015 in China & will reach an impressive figure of 65% by 2030. These facts were made public by the China Academy of Social Science [CASS] through their annual report (2010). Although the Manufacturers PMI Index of China may have shown some slowing signs, but considering its constant growth numbers in past couple of years, one is assured of a positive long term outlook.This growth is directly going to ring the cash registers of sectors like Cement, Railways & Manufacturing in general & will subsequently provide good returns on the investments in the China Industrial ETFs.

All facts & forecasts aside, Focus worthy point is that China &its huge urban population [which is larger than the total headcount of US & Europe put together] is going to demand more & more goods as it is with other BRIC countries. China is however, leading this list, with a sharp rise in average house hold incomes &also has the industrial capacity to meet these demands in an effective time frame. Mr.WeiHoukai, Director at CASS & considered to be a foremost authority on Chinas Regional Development was recently quoted in China Daily saying that growth potential of the expansive middle & western regions combined with rapid growth of urbanisation is enough to support Chinas current Economic Growth rate for at least the next 15-20 years.

US based investors putting their money In the China Industrial funds have little to lose. The internal growth of the country, at least to an extent seems to have decoupled itself from the common worries like inflation and global uncertainty.

Nobody can discount the fact that the billions of people living in China are going to need more of all consumer products. The current internal demands levied on the Chinas manufacturing sector are very high too. The railways & infrastructure will also have to rise up to this demand. The inventories of the companies in particular from Consumer Goods & Cement are already full to the brim. These corporations have no choice but to scale up their productions & devise a volume based profit policy.

One surely tends to exercise logical thinking before investments, big or small. What will be the implication of any pressure from the world market lobby? Will a slower economic growth, leverage on my investments made in the China Industrial ETF? How will a slower Chinese National Product Rate effect consumption demands?

Well logically, Investments in the China industrial Funds are bound to procure decent returns, simply because this development cannot be stopped(at least for the time being). It is almost like a chain reaction to the hyper growth that China has displayed in the past ten years.

With a focus on ETFs, for US investors these funds are but the first choice. Easily track able& with instant entry and exit procedures, it also provides a good hedging opportunity, even to orthodox investors.

by: stevesmith9899

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